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ACQUISITION PROCESS:
KEY STAGES
Negotiations
• As a general rule the parties are free in choosing terms and
conditions of agreement.
Preliminary contracts
• According to the preliminary contract, the parties undertake
to enter into a future agreement on the transfer of property
(basic contract) under the conditions provided by the
preliminary contract. The preliminary contract shall be
executed in the form prescribed by law for the basic contract,
and if the form of the basic contract is not stipulated, it is to
be executed in writing. Failure to comply with the rules on
the form of the preliminary contract shall entail its invalidity.
Preliminary contract must contain conditions allowing
establishing the subject, as well as other significant terms
of the basic contract. A preliminary agreement shall specify
the period within which the parties undertake to conclude
the basic contract. If such term in the preliminary contract
is not specified, it is subject to the execution of a basic
contract within a year from the date of signing the preliminary
contract. In cases where a party has entered into a preliminary
agreement evades to sign the contract provided, it must
compensate the other party the losses caused by the named
actions, unless otherwise provided by the Kazakhstani laws
or contract. Obligations provided by the preliminary contract
shall be considered as terminated if it is not executed before
the end of the period within which the parties must enter into
the basic contract, either one of the parties gives the other
party an offer to execute the basic contract.
Deed of sale
• The deed of sale must be executed under the sale and
purchase contract, wherein one party (the seller) undertakes
to transfer property in ownership, economic or operational
control of the other party (the buyer), and the buyer agrees
to take the property (goods) and pay him an agreed sum of
money (the price).
• The agreement of sale and purchase of any real estate is the
subject to state registration.
COMMERCIAL LEASES
• The commercial lease is regulated by the Civil Code. Under
the commercial lease agreement the lessor shall provide the
lessee with the entire enterprise as a property complex for
a fee for doing business in temporary possession and use,
including the right to a trade name and (or) the commercial
designation of the authors, to protected commercial
information, as well as other facilities provided by the contract
of exclusive rights – a trademark, service mark, etc. (complex
of exclusive rights), except for those rights and obligations
which the lessor may not transfer to others.
Duration: initial term of the lease
• The initial term of commercial lease agreement is not
specified by the laws of Kazakhstan. We note that this issue is
the subject to the negotiations between the parties.
Transfer of business
• The transfer of the enterprise is carried out on the basis of
transfer and acceptance act. Preparation of the enterprise to
the transfer is the responsibility of the lessor unless otherwise
provided by a lease agreement.
The environmental appendix
• The law do not require such document for commercial lease.
Evolution of the rent during the initial lease
• Subject to the negotiations and agreement of the parties.
Term of the renewed lease
• The term of the renewed lease is not specified by the law and
may be agreed by the parties.
Rent on renewal
• The law do not specify the issues on the rent in case f renewal
of the lease. This issues is up to the agreement of the parties.
TAX
Direct acquisition of a property
(non-residential buildings)
• The acquisition of a non-residential building (or part thereof)
from a seller liable to VAT is automatically subject to VAT
which is levied at the standard rate of 12% and assessed, in
principle, on the purchase price.
• Notary’s services are the same as in the case of residential
property. The registrar fee will be in the range from 926 KZT
($ 6) for a garage to 46,300 KZT ($ 300) for non-residential
property complexes including more than ten separate objects.
Acquisition of shares/interest in a company holding
a property
• The sale of interest in a real estate company (shares in joint
stock company/interest in a partnership) does not result in
taxable turnover for VAT purposes.
• Change of ownership in a company also gives rise to a
registrar fee (fee for state registration of legal entities) of
12,038 KZT ($78), as well as the state duty and any other
notary’s fees.
Asset deal vs. share deal
• Acquisition of the shares/interest in a company may
generate tax savings in terms of VAT (in the case of non-
residential premises), but it may also have other indirect tax
consequences (eg. inheritance of potential tax liabilities, no
right to depreciate shares/interest). At the same time, the
future income from the sale of shares/interest in a company
(capital gain) may not be subject to income tax in Kazakhstan
provided that:
–– the seller holds the shares/interest for more than 3 years;
–– the company is not a subsoil user and does not own
(directly or indirectly) shares/interest in entities which are
subsoil users, the seller is not registered in a jurisdiction
with preferential taxation.
All amounts are effective as of 1 January 2014 (1 monthly calculation index = 1,852 KZT, $ 1 = 155 KZT).
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Investors Guide to Europe 2015